At a Glance: How the Plant-Based Sector Became a Catalyst for Food Industry Change
Recent declarations from the mainstream media that the plant-based revolution is ‘over’ have resulted in doubts about the sector’s future. Underpinned with constant reminders that even major players, including Beyond Meat, have faced stock downturns, such articles have created a worldwide narrative that seems somewhat grim. In turn, this suggests a fading interest in plant-based products, but the truth is more complex.
Contrary to gloomy headlines, the plant-based industry has been on a steady upward trajectory. Sales of plant-based products–including refrigerated plant-based meats– have surged and plant-based food dollar sales exhibited consistent growth from 2018 to 2021, boasting a 54% revenue increase and a compound annual growth rate of 15.5%.
Looking at the larger picture and overall growth of the plant-based industry, not simply comparing dollar sales from the 2019-2020 boom era to now, gives a more comprehensive overview of the ongoing success of food industry disruptors. What’s more, the sector is anticipated to continue growing, to take larger market share away from conventional dairy and meat, but how has it gotten to this point?
These are the key ways that plant-based food companies have secured their permanent seats at the table.
Resilience in the face of resistance
The rise of plant-based food sales was initiated prior to the global Covid-19 pandemic and maintained its momentum as home cooks began experimenting with healthier and new products. When pandemic restrictions eased and restaurants reopened, trends showed that consumers were looking to try plant-based foods out in public and picking them from grocery store shelves.
In 2020, U.S. retail sales for plant-based foods reached $6.9 billion, and by 2021, they set a new record at $7.4 billion. Despite challenges in accurately tracking sales across multiple channels, the industry’s general interest remains robust and tangible. This points to more than just a trend; it’s indicative of a lasting dietary shift. Research supports this theory as it was revealed that over 2 million people participated in Veganuary 2022, the biggest sign-up since the event began in 2014.
The adoption of plant-based foods during the pandemic has been widely attributed to a desire to embrace healthier diets, alongside increased environmental awareness. Moreover, it was not only vegan consumers driving sales, with flexitarians and vegetarians also contributing. The message was that plant-based foods are for everybody and here to stay.
Understanding what consumers want
Plant-based food companies demonstrably possess a keen insight into the nuanced and changeable desires of consumers. Their ability to cater to both early adopters and the mainstream market paves the way for a more inclusive and vibrant food future.
Vegans and flexitarians are just the tip of the iceberg in terms of potential plant-based buyers. As such, focusing marketing campaigns and data analysis on these groups alone overlooks the broader impact of the industry. Moreover, depending on early adopters would neglect the vast mainstream audience that is increasingly embracing plant-based options in their daily lives. The key is to make plant-based food a choice for everybody, not a niche offering for the few and that is exactly what manufacturers have sought to do.
Retailers also play a pivotal role in identifying and addressing consumer wants. Grocery store shoppers can easily differentiate between premium and value-based offerings and they must be given the opportunity to analyze plant-based offerings in this way. Stocking a range of high-end and budget-friendly meat and dairy alternatives helps to educate consumers about the myriad of products available and curtails unfavorable comparisons. For example, a plant-based Beyond Meat burger is still considered an expensive purchase, especially when compared to conventional beef products. However, budget veggie burgers will offer comparable weight to dollar ratios, with no cholesterol and likely a smaller environmental impact.
To continue growing the plant-based market, consumer education and product diversity are paramount. Marketers and merchandisers have the opportunity to enlighten consumers about the unique qualities of alternative products, thereby fostering informed decisions and lasting dietary change. Meanwhile, manufacturers can begin to experiment with less conventional items in a bid to show shoppers that they don’t have to say goodbye to favorite dishes.
Retail support remains strong
While consumers are certainly creating demand for easy access to a wider selection of plant-based products, retailers themselves are seemingly committed to allocating shelf space to meat and dairy alternatives. This, despite economic challenges they are facing with high inflation and rising supplier prices. The latter remains extra pertinent for the UK, following its departure from the EU.
The sentiment among food service retailers is clear – plant-based options remain a central focus, because consumers want them. They also help retail brands to position themselves as companies that prioritize environmentally responsible practices, a niche that appeals to both boards of directors and consumer bases in an increasingly environmentally-aware world.
Where once a few plant-based products could be found scattered throughout grocery stores, increasingly retailers are seeing the value of grouping such items in a clearly marketed store segment. Whole aisles are now dedicated to meat and dairy-free items and clearly signposted for consumer ease. Such moves are a clear indicator that demand is proven and increasing.
The flourishing future of plant-based
Numerous players have entered the burgeoning plant-based arena and while established brands grow and smaller competitors may fail, overall the market will stabilize, over time. This could take the form of retailers scaling back on new brands in the short-term to promote new products from established brands, or unveil their own proprietary plant-based lines. The introduction of such in-house grocery brands stands to counter perceptions of larger brand decline.
It’s not just retailers that are paving the way for a positive future though as restaurants, particularly quick service chains, play a role too. Limited-edition plant-based offerings, such as the Beyond Meat/KFC nuggets, spark interest that can help to reshape consumption patterns. Supported by permanent meat-free menu items, such releases remind consumers that they can eat the foods they enjoy, with a plant-based twist and for a comparable price. In effect, there is no downside and no loss of convenience either.
In grocery aisles and on restaurant menus, the mainstream availability of plant-based options underscores the industry’s resilience and continued expansion. By 2024, the plant-based dairy and meat industries are projected to achieve market value growth of $7.9 billion and $2.6 billion, respectively. If growth continues along the same trajectory beyond 2024, the plant-based sector will have secured more than just a seat at the food system table – it will be driving radical change from within.